1.Login to your blogger dashboard--> layout- -> Edit HTML

2.Scroll down to where you see </head> tag .

3.Copy below code and paste it just before the </head> tag.

<style type='text/css'>
#menu7 {
      width: 200px;
      margin: 10px;
      }

#menu7 ul {
      list-style: none;
      margin: 0;
      padding: 0;
      }

#menu7 img {
  border: none;
}

#menu7 li a {
      height: 32px;
        voice-family: &quot;\&quot;}\&quot;&quot;;
        voice-family: inherit;
        height: 24px;
      text-decoration: none;
      }

#menu7 li a:link, #menu7 li a:visited {
      color: #FFF;
      display: block;
      background:  url(http://4.bp.blogspot.com/_4HKUHirY_2U/Sw8v_p-Qn0I/AAAAAAAAAWU/XTCPFUYIMzI/menu7.gif);
      padding: 8px 0 0 30px;
      }

#menu7 li a:hover, #menu7 li #current {
      color: #FFF;
      background:  url(http://4.bp.blogspot.com/_4HKUHirY_2U/Sw8v_p-Qn0I/AAAAAAAAAWU/XTCPFUYIMzI/menu7.gif) 0 -32px;
      padding: 8px 0 0 30px;
      }
</style>

Note :Please Host menu7.gif yourself.

4.Now save your template.

5.Go to Layout-->Page Elements and click on "Add a gadget".

6.Select "html/java script" and add the code given below and click save.

<div id="menu7">

<ul>

<li><a href="#">Home</a></li>

<li><a href="#">HTML</a></li>

<li><a href="#">CSS</a></li>

<li><a href="#">Java Script</a></li>

<li><a href="#">Templates</a></li>

<li><a href="#">About</a></li>

<li><a href="#">Contact</a></li>

</ul>

</div>

You are done.

Demo